If you are selling your home, it is possible to transfer the mortgage to a buyer. This is also referred to as the buyer assuming the mortgage.
This makes a lot of sense if you are not buying a new house at the same time you are selling your property. The buyer may be interested in this arrangement if your mortgage terms are favorable.
It goes without saying that the buyer will have to agree to his. They have to pay you, the seller, the difference between the mortgage amount and the purchase price.
As an example: If the mortgage balance is $150,000 but you are selling your house for $220,000, the buyer will carry the mortgage but pay you
For example: If your outstanding mortgage balance is $200,000 but you want to sell the home for $300,000, the buyer would assume the mortgage but then pay you the difference of $100,000. ($300,000 – $200,000 = $100,000 balance)
Hence, not all buyers will find this easy and there is also a risk to you should the buyer default in the payments.
The most important things to consider when a buyer is willing to assume the mortgage are:
· The buyer will qualify for the mortgage with the lender
· You will not be responsible for the original mortgage loan agreement
In some cases, the lender will stipulate a condition that you are to remain on the loan agreement for the first 12 months and will only be released once 12 consecutive payments have been made to the mortgage loan.
This type of mortgage is ideal between family members or relatives.